In his long business career, 68-year-old Alan Levan has kept plenty of investments cooking simultaneously, but his main interest for nearly three decades was leading the holding company that owned BankAtlantic, one of the largest Florida-based banks.

Half a decade ago, BankAtlantic was riding high. The Fort Lauderdale-based holding company's market cap had reached $1.1 billion. The bank had expanded into Orlando and Tampa and offered branches open seven days a week. It employed 2,214 in 2007.

Then came the financial crisis.

By 2011, the holding company had gone three years without a quarterly profit and only turned one that year thanks to a $38.7-million gain from selling its Tampa branches. Employment shrank to 983. Its market cap fell to $30 million. Federal regulators hit it with a cease-and-desist order and told it to raise capital. Bauer Financial rated it two stars, "problematic," from 2009 onward.

Levan says he has seen recessions come and go. BankAtlantic would have weathered the storm, he says, but "in the last several years, the regulatory environment became virtually impossible and has forever changed the nature of the banking business. We always knew we would survive and prosper, but the biggest impediment to dealing with that was the regulatory environment."

Levan's strategy for surviving and prospering is to try to do the things that banks do, but outside that "impossible" regulatory environment. His vehicle is the bank's old holding company, now renamed BBX Capital and seeded with the proceeds of the sale of BankAtlantic that he engineered last year to BB&T.

The North Carolina-based bank paid double book value for BankAtlantic's 78 branches, $2.1 billion in loans and $3.3 billion in deposits. BB&T also agreed to pay Levan, his son Jarett, who was the bank's CEO, and Vice Chairman John "Jack" Abdo, $10 million in non-compete and severance payments, although the severance money hasn't come through because the FDIC hasn't approved the payments.

Most significant, Levan and BBX also kept $127 million of BankAtlantic's troubled assets, including every BankAtlantic delinquent loan. BBX and BB&T also agreed to share $356 million more in non-performing loans.

It's on those troubled assets that Levan — with 50 employees in downtown Fort Lauderdale — is building a new financial house. He's out to show that he and BBX can make a life after banking, using investments in non-performing loans and assets as part of the base for a move into operating companies, lending for real estate and real estate development. "We are filling a void that the banks are still not prepared to do," he says.

Levan isn't the first investor eyeing "toxic" bank assets for opportunity. Since real estate went south in 2007, Florida has been a major market for investors who buy non-performing loans from banks and others. Firms such as Sabal Financial, Colony Capital, Fortress, Lone Star and other major funds from New York, Los Angeles and Dallas have gone after loans here, as have Florida-based players such as longtime niche loan buyer St. Petersburg-based Directed Capital ["Playing in the Distressed Field"].

In hot pursuit

SEC Issues

While Alan Levan has eagerly taken over BankAtlantic's non-performing loans, he will have to contend with another legacy issue from BankAtlantic days. This month, he and BBX are scheduled to be tried on Securities and Exchange Commission civil securities fraud charges. The SEC alleges that Levan and BBX made misleading statements in 2007 in public filings and earnings calls about BankAtlantic's deteriorating commercial real estate portfolio. The SEC wants financial penalties and, most significantly, a ban on Levan serving as an officer or director of a publicly held company. Levan says the suit is "nonsense" and "frivolous" and that his company was the first in the country to announce portfolio issues connected to the economy.

Courtesy of BankAtlantic's sale, Levan and BBX didn't have to compete for a basket of distressed debt. And after he took over BankAtlantic's distressed assets, Levan made a statement about the seriousness of his intentions as he collected on one particular debt he had acquired — a $44-million judgment Palm Beach developer Daniel Catalfumo owed on loans taken out from BankAtlantic in 2005 and 2006. Catalfumo, who personally guaranteed the loans, had borrowed the money to finance a Palm Beach Gardens real estate project.

BBX went about collecting with vigor, pursuing the debt in five jurisdictions spread over three countries. Catalfumo countered by seeking protection in bankruptcy court, and in April the case between the two heavyweights rolled into a courtroom in south Florida.

Catalfumo accused Levan's company of "scorched earth" litigation — leave us alone to organize a payment plan and you'll get your money, his side essentially said. Levan and BBX accused Catalfumo of a bad faith filing and of trying to avoid paying what it was owed by making a "fraudulent transfer" of money to trusts in the Cayman Islands and the island of Jersey off the coast of France.

Three months after going to bankruptcy court, Catalfumo agreed to pay Levan's BBX $44 million in cash and property — "substantially in excess of our book value," Levan says — to settle the judgment, which includes default interest, legal fees and costs.

For Levan, whose firm put out a news release heralding the outcome, the settlement represented validation on multiple fronts — not the least of which is his belief that, absent the heavy hand of banking regulators, patient lenders can recover on loans classified as non-performing.

"We never could have done that in a banking environment," Levan says of pursuing the payment, which cost him at least $800,000 in legal fees. "We looked under every rock. We sued 15 companies. We went international. (Regulators) don't like when you spend a lot of money on legal fees. They don't like when you spend a lot of money on collections. In a banking environment, they just want the stuff off your books."

Catalfumo didn't respond to interview requests. His attorney, Bradley Shraiberg, of Shraiberg, Ferrara & Landau in Boca Raton, says that in a non-banking environment, borrowers also have rights, including filing for Chapter 11 protection to level the playing field. He says Catalfumo was pleased to be able to pay his creditors.

Meanwhile, Levan says he's "very happy" with BBX's remaining portfolio, which he got at values written down by "hundreds of millions" of dollars by BankAtlantic. He says he has a "magnificent retail site" in Orlando, for example, and a Miami-Dade parcel near I-75 suitable for 800 houses and 200 to 300 apartments. BBX plans to renegotiate the terms of a few loans, while foreclosing on most and developing the properties itself. He's already taken over a business that way — RoboVault, a high-end, robotic self-storage vault in Fort Lauderdale that BankAtlantic loaned money to and that BBX took in bankruptcy court and now operates as a long-term holding.

Other properties will be sold when the market is ripe rather than when regulators say. "In a non-banking environment, you can work the real estate to its highest and best value," he says.

As for the $356 million in non-performing loans it shares with BB&T, Levan says, "We don't think any of it was toxic." Many of the loans were current in payments but were considered distressed because the value of the collateral real estate had fallen below the loan amount.

On those loans, BB&T will get the first 95% of any money realized up to $285 million. Levan's company gets the other 5%, plus all the gain after BB&T is paid off.

As of the end of the second quarter, Levan's company had paid BB&T $130 million of the $285 million owed, a pace that eclipses, after about a year, its benchmark in the BB&T agreement for three years.

"We are so far ahead of the benchmarks. Everyone was referring to these assets as being toxic, as the assets not being worth anything," Levan says. "We knew, based on our real estate experience, we had a gold mine."

Going forward, Levan is likely to find tightening yields in the loan-acquisition market ["Late Innings"]. BBX lost $2.85 million in the second quarter. Its stock, which bottomed at $1.50 in the last two years, reached above $13 per share in August.

Levan, who was paid $5.6 million in salary, bonus and stock in 2012 by BBX, plans in the fourth quarter to have the company absorbed into BFC Financial, Levan's other publicly traded company, which he controls with longtime business associate Abdo. BFC already owns a majority of Boca Raton-based timeshare company Bluegreen; BBX acquired the rest in April so the deal will put Bluegreen, operator of 61 timeshare resorts with 200,000 timeshare owners, under one roof.

The last 15 months also have seen Levan and Abdo bring about the sale, after plenty of contention with other parties, of Doral-based Japanese steak house chain Benihana to private equity firm Angelo, Gordon. BFC gained $9.3 million on its Benihana shares.

Levan gives a mixed answer to whether he misses retail banking. Bankers, he says, help people buy homes, get ahead and grow businesses.

But, he adds, "It's kind of like asking somebody how the marriage is going and they say, 'I've been happily married for 20 years. Unfortunately, I've been married for 25 years.' "

Late Innings'

The outlook for investors looking for opportunity in toxic bank assets is clouded. The FDIC isn't an active seller, and many banks have been reluctant to take the hit to their capital that selling entails. Improving bank earnings and financials, and a reviving real estate market, have slowed sales, too.

Real Capital Analytics reports $26.2 billion in troubled commercial real estate loans and foreclosed real estate has been worked out in Florida's major metros since the start of the recession, with recovery rates ranging from lows of 56% in Jacksonville and southwest Florida to a high of 66% in Miami. Through the first part of the year, in every market tracked, other than Jacksonville, the pace of resolutions exceeds that of new problem loans.

"There's less supply," says Joseph McBride, an analyst with Trepp, a New York-based commercial real estate and banking information firm.

A smaller supply, however, is relative. In south Florida alone, according to Trepp, $927 million in commercial real estate loans was 60 days past due in July, ranging from a Miami Beach boutique hotel with a $103-million debt to a small apartment building in Hollywood with less than $1 million.

Real Capital Analytics as of July still was tracking $12.3 billion in commercial real estate loans in default or in special servicing in Miami, Palm Beach, Tampa, Orlando, Broward, southwest Florida and Jacksonville. Ernst & Young also notes that billions of dollars in commercial real estate loans will mature nationally over the next five years.

For investors in search of high yields, "you're in the late innings," says Kingsley Greenland, president and CEO of Boston-based loan advisory firm DebtX.